1 Report
Background
1. The Supplementary Estimates for 2013-14
laid by the Treasury on 12 February 2014 included one for the
Serious Fraud Office comprising £19 million for additional
departmental expenditure limit (DEL) resource provision.[1]
The ambit of this Supplementary Estimate is:
administration of The Serious Fraud
Office (SFO) offices; capital costs and operational costs incurred
including costs of staff, fees to Counsel and outside accountants,
witness expenses, use of information technology to improve presentation
of evidence, other investigation, prosecution and litigation costs,
defendants' costs and damages ordered by the court to be paid
by the SFO, and associated non-cash costs falling in DEL.[2]
2. The size of the Supplementary Estimate
is considerable in relation to the SFO's budget for 2013-14. It
represents an increase of 52% in the SFO's resource requirement
for the year from £36,607,000 to £55,607,000. The SFO
has already drawn down £11 million from the Contingencies
Fund to meet its expenditure requirements[3],
and will be repaying that money from the Supplementary Estimate
provision once it has been approved by the House. The SFO also
received £5 million additional funding as part of the Main
Estimate process for 2013-14, so in total it will have received
£24 million extra in this financial year.
3. The Estimates Memorandum provided
to us by the SFO was terse in its explanation of the reasons for
the need for the additional provision. It said the money was needed
"in respect of the Tchenguiz litigation, to meet other legal
liabilities, to provide additional funding for the LIBOR investigation,
and to provide additional funding for two further significant
investigations".[4]
4. We wrote to the SFO seeking further
information on the reasons for the Supplementary Estimate, and
they responded by means of a letterfrom the Director, David Green
CB QC, dated21 February. We have agreed with the SFO to keep confidential
information in this letter which might, if published, be of assistance
to suspects in criminal investigations or to parties in litigation,
and we are therefore publishing it with redactions.[5]We
are grateful to the SFO for responding so promptly to our request
for further information.
5. In his letter Mr Green explains the
context of the £24 million additional funding received by
the SFO in 2013-14:
This funding reflects the arrangement
through which "Blockbuster" cases are supported. It
is in the nature of the SFO's work that significant additional
funding can be required at short notice. In a very short space
of time, it can become clear that an investigation, as wide as
that into Libor, is required. At the same time, I consider it
would be unacceptable to have expert investigators, lawyers and
accountants as permanent employees waiting around in case such
an investigation is required.[6]
He adds, however, that he is keen that
an "appropriate and more certain funding model can be agreed
by all those with an interest".[7]
6. We note that some arrests have been
made and some criminal charges have been brought as a result of
the SFO's investigations. We also note that a civil case for damages
has been brought against the SFO in the Tchenguiz case, which
has been running for several years and pre-dates the current Director
taking up his post.. We make no comment on these matters.
Conclusion
7. The magnitude of the SFO's request
for additional resources by means of a Supplementary Estimate,
when considered against the size of the Office's budget, is a
cause of considerable interest for us, and we consider that the
Supplementary, and the funding arrangements for so-called Blockbuster
cases which underlie it, are matters which should be drawn to
the attention of the House before it is asked to approve the Estimates.
We intend to pursue with the Attorney General the question of
whether he considers that the current funding arrangements of
the SFO are sustainable.
1 Central Government Supply Estimates 2013-14: Supplementary
Estimates and New Estimates, HM Treasury, February 2014, p. 367 Back
2
Ibid Back
3
Written Statement, Serious Fraud Office (Contingencies Fund Advance),
HC Deb, 30 January 2014, col 39WS Back
4
Page 5 Back
5
Pages 8 and 9 Back
6
Page 8 Back
7
Page 9 Back
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